Question 1

When Ukraine trades with Italy,

Accepted Answer

A)   both countries are likely made better off.
B)   only Italy benefits since Ukraine can produce all goods at a higher level of quality than Italy.
C)   only Ukraine benefits since Italy's low wages guarantee that Italian firms will be profitable regardless of trade.
D)   neither country will benefit since Ukraine is more efficient than Italy in the production of all goods.E) A) and B)
F) A) and C)

Question 2

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

The answer of Invisible hand is a term used by...

Question 3

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Accepted Answer

A)   1960s.
B)   1970s.
C)   1980s.
D)   1990s.E) A) and D)
F) B) and C)

Question 4

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)   resources are scarce.
B)   goods and services are not scarce.
C)   incomes fluctuate with business cycles.
D)   people, by nature, tend to disagree.E) C) and D)
F) All of the above

Question 5

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Accepted Answer

A)   the unexpected repairs and the increase in the price of gas
B)   the unexpected increase for repairs, but not the increase in the price of gas
C)   the increase in the price of gas, but not the unexpected repairs
D)   neither the unexpected increase in the price of gas nor the unexpected repairsE) B) and D)
F) A) and C)

Question 6

You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Accepted Answer

A)   the amount you value the first movie + $3
B)   the amount you value the first movie + $9
C)   $3
D)   $9E) A) and B)
F) B) and C)

Question 7

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)   studies show that individuals with higher levels of income pollute less than low-income individuals.
B)   efforts to reduce pollution typically are not completely successful.
C)   laws that reduce pollution raise costs of production and reduce incomes.
D)   employing individuals to clean up pollution causes increases in employment and income.E) A) and B)
F) None of the above

Question 8

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Accepted Answer

A)   not emit any pollution so as to avoid the entire cost of the pollution.
B)   emit lower levels of pollution.
C)   emit an acceptable level of pollution.
D)   emit too much pollution.E) B) and C)
F) B) and D)

Question 9

A marginal change is a

Accepted Answer

A)   change that involves little, if anything, that is important.
B)   large, significant adjustment.
C)   change for the worse, and so it is usually a short-term change.
D)   small, incremental adjustment.E) All of the above
F) A) and C)

Question 10

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Accepted Answer

A)   For the first 24 houses, the average cost per house was $205,000.
B)   The marginal cost of the 25th house, if it is built, will equal $250,000.
C)   If the company can sell the 25th house for at least $202,000, then it should build it.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 11

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. A customer is willing to pay $60 for the 601st heart rate monitor. Should the company produce and sell it? Explain.

Accepted Answer

No, because the marg...

Question 12

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Accepted Answer

A)   more than $200.
B)   more than $300.
C)   more than $500.
D)   This cannot be determined from the information given.E) C) and D)
F) B) and D)

Question 13

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor...

Question 14

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 15

Government policies designed to equalize the distribution of economic well-being include (i)  the welfare system
(ii)  unemployment insurance
(iii)  progressive income tax

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (ii)  only
D)   (i) , (ii) , and (iii) E) A) and B)
F) A) and C)

Question 16

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Accepted Answer

A)   rent the room because the marginal benefit exceeds the marginal cost.
B)   rent the room because the marginal benefit exceeds the average cost.
C)   not rent the room because the marginal benefit is less than the marginal cost.
D)   not rent the room because the marginal benefit is less than the average cost.E) A) and B)
F) A) and C)

Question 17

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Accepted Answer

A) True 
 B)False

Question 18

Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points.
-Refer to Scenario 1-4. What is your opportunity cost of going to the movies?

Accepted Answer

$16.75 and...

Question 19

Inflation is the primary determinant of a country's living standards.

Accepted Answer

A) True 
 B)False

Question 20

In the long run the primary effect of increasing the quantity of money is higher prices.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Government policies designed to equalize the distribution of economic well-being include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$16.75 and...
View Answer

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Correct Answer
verified

Inflation is the primary determinant of a country's living standards.

Correct Answer
verified

A tradeoff exists between a clean environment and a higher level of income in that

Correct Answer
verified

In the long run the primary effect of increasing the quantity of money is higher prices.

Correct Answer
verified

The overriding reason why households and societies face many decisions is that

Correct Answer
verified

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Correct Answer
verified

A marginal change is a

Correct Answer
verified

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct Answer
verified
They reduce the reward for wor...
View Answer

Correct Answer
verified
No, because the marg...
View Answer

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct Answer
verified

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Correct Answer
verified

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Correct Answer
verified

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct Answer
verified

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Correct Answer
verified

When Ukraine trades with Italy,

Correct Answer
verified

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Correct Answer
verified

Market power and externalities are two possible causes of market failure.

Correct Answer
verified

Exam 1: Ten Principles of Economics

Government policies designed to equalize the distribution of economic well-being include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified$16.75 and...View AnswerShow Answer

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Correct AnswerverifiedShow Answer

Inflation is the primary determinant of a country's living standards.

Correct AnswerverifiedShow Answer

A tradeoff exists between a clean environment and a higher level of income in that

Correct AnswerverifiedShow Answer

In the long run the primary effect of increasing the quantity of money is higher prices.

Correct AnswerverifiedShow Answer

The overriding reason why households and societies face many decisions is that

Correct AnswerverifiedShow Answer

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Correct AnswerverifiedShow Answer

A marginal change is a

Correct AnswerverifiedShow Answer

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct AnswerverifiedThey reduce the reward for wor...View AnswerShow Answer

Correct AnswerverifiedNo, because the marg...View AnswerShow Answer

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct AnswerverifiedShow Answer

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Correct AnswerverifiedShow Answer

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Correct AnswerverifiedShow Answer

When Ukraine trades with Italy,

Correct AnswerverifiedShow Answer

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Correct AnswerverifiedShow Answer

Market power and externalities are two possible causes of market failure.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
$16.75 and...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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They reduce the reward for wor...
View Answer

Correct Answer
verified
No, because the marg...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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